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"Longer-term Issues for America Are Really, Really Serious," Bishop Says

Posted Jun 04, 2010 07:30am EDT by Heesun Wee in Investing, Recession, Banking, Politics
Related: ^dji, ^gspc, tlt, tbt, euo, man

With economic and political tensions rising in Europe, the Middle East and the Korean peninsula, fear has returned to the global markets.

A key point of The Economist's recent cover story on the subject: It was assumed the return of big government would herald solutions to the economic crisis. The tables quickly have turned and today government is perceived as the problem.

"Now people are saying, 'well actually, has government got the ability to solve some of these big problems that we face?'," says our guest Matthew Bishop, U.S. business editor for The Economist. "The markets, I think, what we've seen the last few weeks, the nervousness about sovereign debt is only going to get worse as the year goes on."

While the U.S. dollar and Treasuries are benefiting near-term from Europe's fiscal problems, Bishop anticipates tough times ahead for both America and Europe. "It's going to be a horrible roller coaster in Europe. There's going to be a lot of political stresses and strains," he says.

Meanwhile, Bishop remains skeptical a new Congress after the November mid-term elections will yield a return to fiscal discipline in the U.S. "The longer-term issues for America are really, really serious," adds Bishop, co-author of The Road from Ruin: How to Revive Capitalism and Put America Back on Top.

Click on the player to view the full discussion on short-term market volatility and the near-term view for European economies.

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